(a) Surbhi Fragrance Ltd. is engaged in manufacturing and selling of pharmaceutical products. The net profit...

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(a) Surbhi Fragrance Ltd. is engaged in manufacturing and selling of pharmaceutical products. The net profit of the company as per profit and loss account for the year ended 31st March, 2021 is 800 lakhs, after debiting or crediting the following items: (i) Payment of 40 lakhs in the month of October 2020 to a foreign company for obtaining know how for a product launched in the month of November 2020. (ii) Electricity charges of 5 lakhs for the month of March 2021 was unpaid up to the due date of filing of return. (ii) Loss of 3 lakhs due to hedging contract against future price fluctuations in respect of import of raw material, used in the course of manufacturing. (iv) Depreciation charged to the Statement of Profit and Loss Account was 40 lakhs. (v) Loss of 1 lakh from hedging contracts entered into for mitigating the loss arising due to fluctuation in foreign currency payment towards an imported machinery purchased from Germany for 60 lakhs, which was installed in the month of December 2020. (vi) Unabsorbed depreciation of 10 lakhs pertaining to A.Y. 2020-21 from a business which is no longer in existence. (vii) 20 lakhs received from Z Ltd. under an agreement in the form of non-compete fees for not carrying out any business in a particular product. (viii) Advance received amounting to 20 lakhs on proposed sale of land, forfeited due to non-receipt of balance amount of 70 lakhs on time, as per terms of agreement. The land was purchased during FY 2016-17. (ix) Excess on sale of unlisted shares - 15 lakhs (Sold on 15th February, 2021). Additional Information: (1) Normal depreciation allowable as per the Income-tax Act, 1961 35 lakhs. (2) Depreciation on plant and machinery imported and installed during December 2020 has not been considered while calculating depreciation as per Income-tax Act, 1961. (3) The unlisted shares were acquired on 29.3.2018 for 80 lakhs. (4) Cost Inflation Index F.Y. 2016-17-264, F.Y. 2017-18-272, F.Y. 2020-21-301. You are required to compute the total income for Assessment Year 2021-22 clearly stating the reasons for treatment of each of the items given above. The return of income of the company is to be filed applying the provision of the section 115BAA. (8 Marks) (b) Mr. David, a foreign national and a professional hockey player came to India in February 2021 to participate in hockey matches. Following are the amounts he earned as income during his stay in India. Advertisement of a product on T.V. Participation in matches in India Contribution of articles in newspaper *1,50,000 76,00,000 20,000 35,000 Winning from Horse races Assuming he has no other income from India during the P.Y. 2020-21, you are required to compute his tax liability for the A.Y. 2021-22. Also discuss the applicability of relevant TDS provisions in respect of such incomes and the amount of TDS, if any. (6 Marks) (a) Surbhi Fragrance Ltd. is engaged in manufacturing and selling of pharmaceutical products. The net profit of the company as per profit and loss account for the year ended 31st March, 2021 is 800 lakhs, after debiting or crediting the following items: (i) Payment of 40 lakhs in the month of October 2020 to a foreign company for obtaining know how for a product launched in the month of November 2020. (ii) Electricity charges of 5 lakhs for the month of March 2021 was unpaid up to the due date of filing of return. (ii) Loss of 3 lakhs due to hedging contract against future price fluctuations in respect of import of raw material, used in the course of manufacturing. (iv) Depreciation charged to the Statement of Profit and Loss Account was 40 lakhs. (v) Loss of 1 lakh from hedging contracts entered into for mitigating the loss arising due to fluctuation in foreign currency payment towards an imported machinery purchased from Germany for 60 lakhs, which was installed in the month of December 2020. (vi) Unabsorbed depreciation of 10 lakhs pertaining to A.Y. 2020-21 from a business which is no longer in existence. (vii) 20 lakhs received from Z Ltd. under an agreement in the form of non-compete fees for not carrying out any business in a particular product. (viii) Advance received amounting to 20 lakhs on proposed sale of land, forfeited due to non-receipt of balance amount of 70 lakhs on time, as per terms of agreement. The land was purchased during FY 2016-17. (ix) Excess on sale of unlisted shares - 15 lakhs (Sold on 15th February, 2021). Additional Information: (1) Normal depreciation allowable as per the Income-tax Act, 1961 35 lakhs. (2) Depreciation on plant and machinery imported and installed during December 2020 has not been considered while calculating depreciation as per Income-tax Act, 1961. (3) The unlisted shares were acquired on 29.3.2018 for 80 lakhs. (4) Cost Inflation Index F.Y. 2016-17-264, F.Y. 2017-18-272, F.Y. 2020-21-301. You are required to compute the total income for Assessment Year 2021-22 clearly stating the reasons for treatment of each of the items given above. The return of income of the company is to be filed applying the provision of the section 115BAA. (8 Marks) (b) Mr. David, a foreign national and a professional hockey player came to India in February 2021 to participate in hockey matches. Following are the amounts he earned as income during his stay in India. Advertisement of a product on T.V. Participation in matches in India Contribution of articles in newspaper *1,50,000 76,00,000 20,000 35,000 Winning from Horse races Assuming he has no other income from India during the P.Y. 2020-21, you are required to compute his tax liability for the A.Y. 2021-22. Also discuss the applicability of relevant TDS provisions in respect of such incomes and the amount of TDS, if any. (6 Marks)

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